April 30, 2009
Kmart Puts Emphasis on Shoe Biz
The shoe department used
to be something that Kmart outsourced. That changed when the chain decided
to take over its own shoe business as part of its strategy of raising its
fashion profile while remaining committed to price points its shoppers
expect.
Tracy Van Hoven,
chief merchandising officer, footwear for Kmart parent Sears Holdings,
recently spoke with BNET about the company’s change in direction
and what it is looking to accomplish with its new approach.
"Footwear
is critical to the Kmart merchandising mix for a number of reasons, including
the fact that shoes and accessories are the simplest and most affordable
way to update your wardrobe. Footwear is also a proven traffic driver as
trends move, seasons change and individual style evolves," said Ms.
Van Hoven.
"Our
recent efforts have been designed to optimize our merchandising mix by
taking the following into consideration: gender and age; core versus fashion
merchandise; seasonality and key selling periods; pricing and promotions;
region and climate… We know that customers consistently buy footwear
based on comfort, style, price, and brand. We build all of our products with
these attributes in mind. Finally, offering key national brands like Disney,
Nickelodeon, Protégé, and NSS skate shoes for kids, juniors, and young
men ensures that we are a true footwear destination for the entire family."
Discussion Questions:
Do you see it as a positive that Kmart took over its footwear department
rather than outsourcing it? Is the company’s
product selection, pricing and presentation in stores and ads making
the statement that needs to be made to build the business?
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I think what really happened is that no company wanted to be inside a Kmart store selling shoes because the stores are such low volume. So Kmart tries to put a positive spin on the situation and make it sound like they want to operate the shoe department themselves.
The footwear department at Kmart is a much better place to shop these days. Slippers and sneakers are key items that sell well. So do ladies and kid’s footwear. A very smart move, Kmart.
Having more control over SKUs and pricing is a good idea in the ultra-competitive shoe biz. I’m not sure why they sent it out anyways. Shoes are a good margin category.
I hope and assume that Kmart tested the takeover of its shoe business in a number of stores before rolling it out chainwide. If so, I also assume this was a smart business decision in terms of more productivity and higher margins. On the other hand, the brand offerings especially in adult athletic footwear are not strong enough to establish Kmart as anything like a “headquarters” store. (Protege is, after all, a private label without the cachet of the national brands or “exclusive” brands like Converse at Target.) And most retailers recognize that they need to get the apparel business right before “fixing” footwear, not necessarily the other way around.
Will shoes save Kmart from itself? Nordstrom built its business on shoes and customer service. I doubt Kmart can do the same. The real question is: Is Kmart still relevant in the retail world?
I think Kmart is making a move in the right direction, and that is to get some more items in the baskets of its shoppers, by satisfying the needs of the families on tight budgets in whatever way they can. Will they ever get big cult shoe brands? No. But so what? They are making their shopper base more loyal. Every item counts. They will learn the business and improve it as time goes on.
I wish I had not ever given in to the cult brand shoe fixation my 19 y/o son has. Now that I won’t buy, he’s changing his top-end brand fixation pretty radically. 🙂 ’bout time.
There are two major trends pulling in opposite directions that will determine whether Kmart’s move is smart.
On one hand, you have the shrinking retail market in general and the need for retailers to expand their categories in order to sustain volume. This seems to be the factor which has driven Kmart and no one can deny it is cheaper to do it yourself than to pay someone else. The question is whether you have the knowledge and can afford the time to manage your own shoe department. We will find out whether Kmart has the capability.
On the other hand, the rising cost of a full blown retail presence seems to be pushing brick and mortar retailers to find ways to reduce operating costs. Just as they share wholesalers or transportation companies, why not collaborate on physical plant by subleasing departments instead of operating full scale stores? It is really just another variation on the concept of a mall, but in a much smaller footprint, with each retailer merchandising their product line and enjoying the traffic generated by complimentary products. I see this type of arrangement expanding, as the “mini malls” provide broadband access to support the expanded assortment that is only available over the Internet and retailers offer more “purchase online, pick up at store” scenarios.
Given their wide product mix, I think Kmart made the right decision. They are large enough to be their own “destination.” But they must not underestimate the unique characteristics of a department like shoes, where products are so unique for each customer. Unlike other areas of the store where product differentiation is minimal, not all consumers have bunions in the same place. It takes a lot of service and a well thought out returns policy to make shoes a success.
No matter the economy kids’ feet grow, school starts every fall, work shoes eventually start to look shabby, social events are attended, and sneakers wear out. With a focus on the right products I think there is a place in the shoe space for Kmart, and owning it directly rather than outsourcing the department can be profitable for them. It will be interesting to see how (and how well) they market their shoe selection. This is where the Sears partnership and history may actually be very useful.
This may be a good move by Kmart but it would seem that it could just be another example of crying out for help. I suspect David Livingston’s analysis may be correct. Kmart needs a more distinctive new image as a retailer, a new reason to go to their stores. Otherwise I see a future without Miss Martha, lights remaining shadowy and a lot of surplus shoes.
This is absolutely a smart move by Kmart and a sign that they are heading in the right direction. They’ve also just launched a new loyalty program, that will provide further support to this business.
Having worked with a very famous retailer known for its shoe business, we know that when it’s done right, good things happen to the top and bottom line. With the right loyalty strategy it happens even more.
My first instinct, as it appears that of many of us, is to smash Kmart at every move. The fact of the matter, according to their own information “As of January 31, 2009, Holdings operated a total of 1,368 Kmart stores across 49 states, Guam, Puerto Rico, and the U.S. Virgin Islands. This store count consist of 1,321 discount stores, averaging 92,000 square feet, and 47 Super Centers, averaging 166,000 square feet.”
With this level of store count and geography, they are relevant, they still exist, and they are still selling. While certainly they may not be selling what some may think they should be, to maintain this level of presence as a retailer, they are, in fact, selling something.
It is possible, even when a horse like this has been beaten to death, that they could do something right. The fact that they made a decision like this, explained it coherently, and have an execution plan is a good sign. It might be time that we look at each move made by Kmart a little more evenly. While I personally think that this move alone will have little effect overall, it is possible that in combination with many other moves, it could have an overall positive impact.
No, I am not a huge fan of Kmart. Yes, I may have bashed the living daylights out of them in the past just as many of us have. The fact remains that as much as we have beaten this horse, its still standing. There is a lot to be said for that. As far as I know, they haven’t received a government bailout either. That in itself is saying something.
This might be one move that we should put on a list along with the next one made by Kmart and just see what happens. Their continued survival surprises me, yet makes me even more curious about what is actually possible. I am not so sure that the consumer really likes fewer choices and that may just be to Kmart’s advantage. A better choice for shoes might only be a small part of it but you don’t fix it all without fixing one thing at a time.
Tracy Van Hoven says it very well: “Footwear is critical to the Kmart merchandising mix for a number of reasons, including the fact that shoes and accessories are the simplest and most affordable way to update your wardrobe.” That suggests that the Kmart shoe operation must be on the front-end of fashion trends in shoes. Can Kmart do this?
Kmart has so many problems as a retailer, it is doubtful that they can be successful shoe merchandisers. The shoe department is one of, if not the most complex category in the store. What does it take? Ironically, Walmart decided that in order to stay on the front edge of fashion, including shoes, that they moved their fashion oriented buying and merchandising to New York City from Bentonville.
I rather doubt that licensed vendor Footstar (formerly Meldisco) would have exited voluntarily, since its Kmart locations have represented virtually its entire business since emerging from bankruptcy in 2006.
For Kmart, taking back its shoe merchandising represents a strategic opportunity to position the chain as a family footwear destination. It’s not a guaranteed win, but it’s a chance to improve on the status quo, while retaining more of the total category margin for itself.
Besides, there’s no business like shoe business….
Tracy Van Hoven states that shoes are a traffic driver as trends change. Let’s assume that she is correct. Does anyone really look to Kmart to see what there view on trends might be? And do people really run to Kmart to get the trendiest pair of shoes? I don’t think so. And I don’t think that running their own shoe department will have any positive impact on Kmart’s overall business.
Kmart should focus their efforts on their core competencies, and if they used the space dedicated for shoes, and sold soft goods instead, they most likely would gain a better ROI, and not have to worry about fashion trends at all.
Kmart is doing the right thing. They have the capabilities and abilities to implement any department they choose. Why did they outsource something so integral in the first place is the better question. Cost, focus and fashion (which rapidly changes) are the answers, and represent the keys to this department’s success both now and in the future. As long as Kmart does not lose sight of the customer in this department, as well as Kmart’s abilities to rapidly respond to these key factors, they will be successful.
One of the keys to success in shoes is inventory management, due to the number of size-related SKUs. The turns are slower, so the margins have to be higher, and any inventory imbalances can kill you, and that’s before you factor in the impact of seasonality. Kmart’s never been great at inventory management, so keep an eye on out-of-stocks, as well as the markdown activity.
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I think what really happened is that no company wanted to be inside a Kmart store selling shoes because the stores are such low volume. So Kmart tries to put a positive spin on the situation and make it sound like they want to operate the shoe department themselves.
The footwear department at Kmart is a much better place to shop these days. Slippers and sneakers are key items that sell well. So do ladies and kid’s footwear. A very smart move, Kmart.
Having more control over SKUs and pricing is a good idea in the ultra-competitive shoe biz. I’m not sure why they sent it out anyways. Shoes are a good margin category.
I hope and assume that Kmart tested the takeover of its shoe business in a number of stores before rolling it out chainwide. If so, I also assume this was a smart business decision in terms of more productivity and higher margins. On the other hand, the brand offerings especially in adult athletic footwear are not strong enough to establish Kmart as anything like a “headquarters” store. (Protege is, after all, a private label without the cachet of the national brands or “exclusive” brands like Converse at Target.) And most retailers recognize that they need to get the apparel business right before “fixing” footwear, not necessarily the other way around.
Will shoes save Kmart from itself? Nordstrom built its business on shoes and customer service. I doubt Kmart can do the same. The real question is: Is Kmart still relevant in the retail world?
I think Kmart is making a move in the right direction, and that is to get some more items in the baskets of its shoppers, by satisfying the needs of the families on tight budgets in whatever way they can. Will they ever get big cult shoe brands? No. But so what? They are making their shopper base more loyal. Every item counts. They will learn the business and improve it as time goes on.
I wish I had not ever given in to the cult brand shoe fixation my 19 y/o son has. Now that I won’t buy, he’s changing his top-end brand fixation pretty radically. 🙂 ’bout time.
There are two major trends pulling in opposite directions that will determine whether Kmart’s move is smart.
On one hand, you have the shrinking retail market in general and the need for retailers to expand their categories in order to sustain volume. This seems to be the factor which has driven Kmart and no one can deny it is cheaper to do it yourself than to pay someone else. The question is whether you have the knowledge and can afford the time to manage your own shoe department. We will find out whether Kmart has the capability.
On the other hand, the rising cost of a full blown retail presence seems to be pushing brick and mortar retailers to find ways to reduce operating costs. Just as they share wholesalers or transportation companies, why not collaborate on physical plant by subleasing departments instead of operating full scale stores? It is really just another variation on the concept of a mall, but in a much smaller footprint, with each retailer merchandising their product line and enjoying the traffic generated by complimentary products. I see this type of arrangement expanding, as the “mini malls” provide broadband access to support the expanded assortment that is only available over the Internet and retailers offer more “purchase online, pick up at store” scenarios.
Given their wide product mix, I think Kmart made the right decision. They are large enough to be their own “destination.” But they must not underestimate the unique characteristics of a department like shoes, where products are so unique for each customer. Unlike other areas of the store where product differentiation is minimal, not all consumers have bunions in the same place. It takes a lot of service and a well thought out returns policy to make shoes a success.
No matter the economy kids’ feet grow, school starts every fall, work shoes eventually start to look shabby, social events are attended, and sneakers wear out. With a focus on the right products I think there is a place in the shoe space for Kmart, and owning it directly rather than outsourcing the department can be profitable for them. It will be interesting to see how (and how well) they market their shoe selection. This is where the Sears partnership and history may actually be very useful.
This may be a good move by Kmart but it would seem that it could just be another example of crying out for help. I suspect David Livingston’s analysis may be correct. Kmart needs a more distinctive new image as a retailer, a new reason to go to their stores. Otherwise I see a future without Miss Martha, lights remaining shadowy and a lot of surplus shoes.
This is absolutely a smart move by Kmart and a sign that they are heading in the right direction. They’ve also just launched a new loyalty program, that will provide further support to this business.
Having worked with a very famous retailer known for its shoe business, we know that when it’s done right, good things happen to the top and bottom line. With the right loyalty strategy it happens even more.
My first instinct, as it appears that of many of us, is to smash Kmart at every move. The fact of the matter, according to their own information “As of January 31, 2009, Holdings operated a total of 1,368 Kmart stores across 49 states, Guam, Puerto Rico, and the U.S. Virgin Islands. This store count consist of 1,321 discount stores, averaging 92,000 square feet, and 47 Super Centers, averaging 166,000 square feet.”
With this level of store count and geography, they are relevant, they still exist, and they are still selling. While certainly they may not be selling what some may think they should be, to maintain this level of presence as a retailer, they are, in fact, selling something.
It is possible, even when a horse like this has been beaten to death, that they could do something right. The fact that they made a decision like this, explained it coherently, and have an execution plan is a good sign. It might be time that we look at each move made by Kmart a little more evenly. While I personally think that this move alone will have little effect overall, it is possible that in combination with many other moves, it could have an overall positive impact.
No, I am not a huge fan of Kmart. Yes, I may have bashed the living daylights out of them in the past just as many of us have. The fact remains that as much as we have beaten this horse, its still standing. There is a lot to be said for that. As far as I know, they haven’t received a government bailout either. That in itself is saying something.
This might be one move that we should put on a list along with the next one made by Kmart and just see what happens. Their continued survival surprises me, yet makes me even more curious about what is actually possible. I am not so sure that the consumer really likes fewer choices and that may just be to Kmart’s advantage. A better choice for shoes might only be a small part of it but you don’t fix it all without fixing one thing at a time.
Tracy Van Hoven says it very well: “Footwear is critical to the Kmart merchandising mix for a number of reasons, including the fact that shoes and accessories are the simplest and most affordable way to update your wardrobe.” That suggests that the Kmart shoe operation must be on the front-end of fashion trends in shoes. Can Kmart do this?
Kmart has so many problems as a retailer, it is doubtful that they can be successful shoe merchandisers. The shoe department is one of, if not the most complex category in the store. What does it take? Ironically, Walmart decided that in order to stay on the front edge of fashion, including shoes, that they moved their fashion oriented buying and merchandising to New York City from Bentonville.
I rather doubt that licensed vendor Footstar (formerly Meldisco) would have exited voluntarily, since its Kmart locations have represented virtually its entire business since emerging from bankruptcy in 2006.
For Kmart, taking back its shoe merchandising represents a strategic opportunity to position the chain as a family footwear destination. It’s not a guaranteed win, but it’s a chance to improve on the status quo, while retaining more of the total category margin for itself.
Besides, there’s no business like shoe business….
Tracy Van Hoven states that shoes are a traffic driver as trends change. Let’s assume that she is correct. Does anyone really look to Kmart to see what there view on trends might be? And do people really run to Kmart to get the trendiest pair of shoes? I don’t think so. And I don’t think that running their own shoe department will have any positive impact on Kmart’s overall business.
Kmart should focus their efforts on their core competencies, and if they used the space dedicated for shoes, and sold soft goods instead, they most likely would gain a better ROI, and not have to worry about fashion trends at all.
Kmart is doing the right thing. They have the capabilities and abilities to implement any department they choose. Why did they outsource something so integral in the first place is the better question. Cost, focus and fashion (which rapidly changes) are the answers, and represent the keys to this department’s success both now and in the future. As long as Kmart does not lose sight of the customer in this department, as well as Kmart’s abilities to rapidly respond to these key factors, they will be successful.
One of the keys to success in shoes is inventory management, due to the number of size-related SKUs. The turns are slower, so the margins have to be higher, and any inventory imbalances can kill you, and that’s before you factor in the impact of seasonality. Kmart’s never been great at inventory management, so keep an eye on out-of-stocks, as well as the markdown activity.